Auditing Theory & Practices

Auditing Theory & Practices

Introduction

In order to ensure that an organization is running freely and fairly it needs to perform the process of auditing. According to Kuman auditing is a process of getting and monitoring the activities of the firm, its books of accounts and other financial records. It also checks the transparency and truthiness that needs to be reflected from the presentation of the financial statements of an organization or any government agency. The process of auditing determines whether the financial records, financial statements and books of accounts have been maintained without any fraudulent activity and the information in the books of accounts can be trusted. The research statement or research question of the report is to find out the importance of auditing, how important is auditing in order develop internal control system and how auditing or auditors find out the fraudulent activities in an organization. The report will take into consideration secondary data like articles and researches to find out the answer of the research questions.

Discussion

Auditing is an accounting tool that is used to ensure that the record keeping and development of financial statements is done in the most accurate and transparent manner. The auditing helps the firm in finding out the errors or mistakes in the accounting processes like recording, categorizing or etc. This job is performed by experts in this field who are performing the responsibility of auditing over many years. Today there are several auditing firms that conduct audit of the firms. There are three kinds of audits that are performed by the companies: internal audit, external audit and audit conducted by the government. Internal audits are performed by professionals who try to examine that all the business units in an organization are performing according to policies, procedures and goals set by the organization. Internal auditing also helps in finding out that the recording, reporting, categorization and generation of the financial statements are done according in an accurate manner. Internal audits are sometimes not reliable because it is performed by the employees of an organization. External auditing is a task that is assigned to specialized firms that conduct auditing practices. The main responsibility of the external auditing firms is to check that the financial statements or other financial data that has been published has been developed by using correct accounting measure, the data presented follow all the rules and regulations of accounting and the statements are presented with full honesty. The external auditors at the end of the auditing process generate auditing report expressing and giving comments about the maintenance of the accounts by a firm. The government audits are performed on timely basis in order to find out that the government institutions are performing accurately and that there are no fraudulent activities carrying on in the organizations.

Auditing is a process that needs to be done by following several steps in order to make sure that all the steps of the auditing processes are performed. The auditing process involves: 1) planning- in which it ...